Asia Watch: Growth Sport…Port Proposal…Chinese Mills To Close…
GROWTH SPURT: The 10 economies of East Asia, excluding Japan, are expected to register growth of 6.7 percent as a whole in 2004, or a 0.8 percentage point higher than the 5.9 percent this year, spurred by the “continuing strong...
GROWTH SPURT: The 10 economies of East Asia, excluding Japan, are expected to register growth of 6.7 percent as a whole in 2004, or a 0.8 percentage point higher than the 5.9 percent this year, spurred by the “continuing strong expansion” of the Chinese economy and the recovery and acceleration of growth in other Asian countries, according to the latest forecast by the Institute of Developing Economies of the Japan External Trade Organization.
The 61-page report, “2004 Economic Outlook for East Asia,” said China’s economy is likely to attain a high 8.5 percent growth in 2004, or only a 0.1 percentage point lower than the 8.6 percent estimated for 2003.
China, “with its enormous industrial labor reserve in the countryside and rural areas,” will continue to maintain an advantage in labor costs. But on the negative side, the report noted, the country is faced with a lack of proper infrastructure, as evidenced by the shortage of electricity in Shanghai.
China also is confronted with the possibility of a revaluation of its currency or a switch to a floating exchange-rate system that, the report noted, might discourage direct foreign investments into China.
The report forecasts a growth of 5.1 percent for Hong Kong in 2004, or 2.2 percentage points higher than the previous year, because the Closer Economic Partnership Arrangement, which Hong Kong concluded with China last June, will take effect. The agreement will relax regulations on individual tours from China to Hong Kong, lower tariffs on Hong Kong’s domestic exports to China and allow Hong Kong easier access to service industries in China.
With the prospect of economic upturns and increases in private consumption in 2004, the South Korean economy is heading for growth of 5.1 percent (compared with 3 percent in 2003), Taiwan should register 4.3 percent (against 3.3 percent) and Singapore expects 4.2 percent (against 1.1 percent), the report said.
Growths estimated for other East Asian countries in 2004 are: Indonesia, 4.5 percent (compared with 4 percent); Thailand, 7 percent (6.5 percent); Malaysia, 5.6 percent (4.6 percent); the Philippines, 4.7 percent (4.4 percent), and Vietnam, 7.5 percent (7.2 percent).This month, the Japanese government announced a forecast projecting Japan’s economic growth in fiscal 2004 at 1.8 percent compared with an estimated 2 percent for fiscal 2003 ending next March. — Tsukasa Furukawa
PORT PROPOSAL: In the clearest signal yet that Hong Kong’s Kwai Chung container port is losing business to its rivals in mainland China, The Federation of Hong Kong Industries has appealed to the government to lower charges at the port. Currently, Hong Kong is the busiest container port in the world, but its terminals handled 1.1 million 20-foot equivalent units in September, a 6.6 percent drop from 2002.
The Federation is concerned that the geographic advantage of ports in the mainland will soon outweigh the efficiency of Hong Kong’s terminals. Federation chairman Andrew Leung pointed out that many shipments were diverted from Shenzhen to Hong Kong because the former port is at full capacity. In September, Hong Kong handled just 10,000 more boxes than Shenzhen, in the Special Economic Zone just north of the border.
CHINESE MILLS TO CLOSE: Twenty of the 34 biggest textile mills in Xinjiang, the northwestern province in China, have closed plants or cut production because of escalating cotton prices and a shortage of the fiber. Xinjiang Textile Group, a state-run enterprise that is the largest cotton yarn producer in the province, has closed three of its four mills. It expects to cut production by 50 percent this year. Last year, it had sales of $145 million.
According to a survey by the provincial textile bureau, all the closures or cutbacks have come since September, when cotton fiber prices reached $2,235 a ton. The plant closures have led to numerous protests and demonstrations, prompting Beijing to order officials to ensure that there is no holdup in the delivery of fiber to mills.
High prices isn’t the only problem facing China’s cotton fabric producers. This year, floods ruined the domestic crop, forcing yarn buyers to turn to India and the U.S. for raw material. Officials hope that purchasing large orders of cotton from American suppliers will help ease trade tensions between the two countries.
FIBER PATENT: Bamboo fiber is finding its way into the textile and apparel market in Japan in a big way next spring. Nomura Sangyo Corp., a wool textile manufacturer based in Ichinomiya near Nagoya, which holds the patent rights on the viscose process for production of bamboo fiber, has formed a group with its licensees to promote the fiber and related products.The group, which involves Toray Industries Inc., Kurabo Industries Ltd. and Japan Wool Textile Co., has instituted a system of quality standards and certification to guarantee the high quality of bamboo fiber products to be marketed by the suppliers and prevent patent infringement by other firms. The four companies have established a logo or mark that will be on every label to be attached to products they supply and sell. The logo indicates use of bamboo fiber and Nomura’s patent number, or 3448526.
The four companies are expected to generate bamboo fiber sales of $20 million, or 2.2 billion yen at current exchange, next year. Toray’s production will center on products involving mixtures of bamboo and man-made fibers. Kurabo will be heavy on cotton or wool blends with bamboo fibers, while Japan Wool will concentrate on bamboo and wool mixtures. Raw materials will be imported from India and China.
In addition, two more companies, Chuo Woolen Mills Ltd. and Toabo Corp., have licensing arrangements to use bamboo fibers for specified uses only.
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